Would you buy a car that you couldn’t operate? The latest NFT craze has arrived, but opinions differ on whether it will last.
Carl Benz announced what is now commonly regarded as the world’s first commercial vehicle just before the turn of the nineteenth century. It would have been difficult to predict at the time how this single product would catalyse the growth of a multi-billion-dollar industry over the next century, but it did.
The world has produced innumerable enterprises catering particularly to the concept of car ownership, from refuelling stations and maintenance garages to tech giants like Uber. As a result, there has been more substantial innovation in the automotive arena, resulting in a variety of services valued far more than the automobile manufacturing business alone.
The web is being taken over by digital ownership, and as the world moves closer to combining society and technology, blockchain could be the way we transfer wealth from the physical world to the metaverse. With nonfungible tokens (NFT), the worlds of cars and decentralised networks are finally colliding, just as they did with the Benz Patent Motor Car. Blockchain-based products are creating a vast range of services that could propel the space to new heights, and with nonfungible tokens (NFT), the worlds of cars and decentralised networks are finally colliding.
Automobile manufacturers are progressively joining the NFT industry, which is expected to reach $240 billion by the end of the decade, by minting valuable digital tokens that are sometimes packaged with auto sales.
These aren’t small-name names, either, ranging from rarities like Barrett-Jackson in Arizona and British automotive business MG Motors to luxury and sports car brands like Mercedes-Benz and Lamborghini.
NFTs getting coffee in their automobiles
Hundreds of thousands of users will get a taste of the early metaverse this year, as interoperable community-governed networks are connected and NFT projects are propelled to new heights. NFT markets have gotten a lot of attention as a result of the metaverse fever, and automotive companies are searching for new ways to grow as a result of the ongoing epidemic.
Last year, Barrett-Jackson auctioned four NFTs based on automobiles sold to raise money for charity in March: the first 2021 Ford Mustang Mach 1 (which sold for over $500,000), a 2021 two-door Ford Bronco, a first-edition 2022 GMC Hummer EV, and a 2021 Ram 1500 TRX Launch Edition, as previously noted. The NFTs, interestingly, did not come with the cars; instead, the bids competed for the digital rights to the vehicles’ sales.
West Coast Customs, a renowned automotive customising and fabrication firm, announced the CarCoin project in April, which offers a tiered membership scheme of NFT automobile-related art. FastLane is a scheme that will offer NFTs for experiences with A-list celebrity auto fans, as well as a single NFT for one lucky winner that will unlock an actual cryptocurrency-themed car.
MG Motors India released 1,111 tokens as part of its launch collection in December of last year, releasing its first NFT on KoineArth’s NgageN, the company’s own purpose-built platform. McLaren stated earlier this month that it plans to produce virtual copies of its F1 vehicles as NFTs.
Mercedes-Benz commissioned five NFT artists — Charlotte Taylor, Anthony Authié, Roger Kilimanjaro, Baugasm, and Antoni Tudisco — to create a collection inspired by the G-Class line of automobiles earlier this month. Mercedes, which has been a pioneer in adopting new technology, has teamed up with blockchain company Circulor to check cobalt emissions in its supply chain.
Lamborghini is also releasing its first NFT collection, which can only be accessed with the use of a “Space Key.” These limited-edition Space Keys are carbon-fiber composites flown to the International Space Station by Lamborghini for research purposes in 2019. They will grant wearers access to five limited-edition pieces of art.
Automobile manufacturers are aware of their target market and recognise the value of quality pop culture specimens, which appear to include The Fast and the Furious films. Last May, a Lykan HyperSport, which was used as a stunt car to fly between skyscrapers in Abu Dhabi during Furious 7, was auctioned on the RubiX network together with its associated NFT.
In the F1 Delta Time blockchain game, an NFT symbolising the first digital Formula 1 car was sold to anonymous buyer Metakovan for $110,000, or 415 Ether (ETH) at the time. During an episode of the Blockchain Gaming World podcast, he claimed, “I could have bought a real automobile for this.” Because the value of ETH has increased significantly after the sale in November 2020, it is still debatable whether the NFT was a worthwhile purchase.
The driving force behind the trend
While some anticipate that NFT sales will become much more common in the vehicle sector, others are doubtful. The basic question is the same as it is with normal NFTs: Do they bring any value?
NFTs have been pushed harder by the GameFi sector than by any other blockchain-based initiative, with in-game assets such as rare vehicles emerging as a sub-trend. Proponents compare it to purchasing a microtransaction skin in an online game, but they overlook the differences in incentives. Axie Infinity, for example, has high entrance barriers and is played with the goal of making money rather than merely having a good time.
Automobile NFTs, according to Apollo Green, CEO and co-founder of Web3 gaming launchpad and incubator QGlobe, can operate as a “pink slip” — a car safety inspection report from an approved institution — and could be particularly valuable for secondary sales of historic cars:
“The utility for high-end luxury cars will evolve to enable scarcity through NFT rarity qualities that match the car’s physical attributes.” When it comes to high-end cars, each one is unique, but these differences aren’t represented in the pink slip today.”
Auto NFTs, according to Andreas Park, a finance professor at the University of Toronto, might potentially be used to measure the shared interest in a self-driving car. NFTs, on the other hand, are the latest version of the bigger fool idea, according to Sam Abuelsamid, principal analyst at Guidehouse Insights. “You’re not getting anything substantial, and you’ll almost certainly get nothing that can’t be recreated,” he explained.
There has been a growing debate within and outside the blockchain industry over whether NFTs are genuinely worth investing in, at least in their current state. While some say that Web3 has the potential to end capitalism’s zero-sum game, others point out shortcomings in present implementations, such as the fact that the most prominent NFT initiatives are very centralised and lack any proof of ownership outside of the token itself.
Regardless, the subject at hand has yet to reach its ultimate form. The blockchain sector as a whole is still in its infancy, and NFTs are an even smaller sub-industry within it. The metaverse is still in its early stages, and while many people are quick to link it to Web3, it’s still too early to tell how well any of them will work.
Web3 aims to turn end-users into owners by giving them control over the data they generate as well as a way to monetize it. However, in order for this to become a reality, corporations will need to drastically adapt their business strategies in order to assure long-term viability. As the use of NFTs grows and firms build models to suit them, the manufacturing of automotive NFTs is expected to rise in the coming years.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
